CLA-2 OT:RR:CTF:TCM H176833 EG
Edward F. Juliano Jr., Esq.
Suite 300
303 Wyman Street
Waltham, MA 02451
RE: Classification of a Battery Module for a Notebook Computer
Dear Mr. Juliano:
This is in response to your request of March 3, 2011, and your supplemental request of June 8, 2011, on behalf of Hewlett-Packard Company (HP), for a binding ruling on the tariff classification of the battery module (the module) designed for HP’s Elitebook notebook computer under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The module will function as a power supply for the HP Model 8560W and the 8760W Elitebook notebook computers. The module includes eight rechargeable lithium-ion batteries, two printed circuit board assemblies and electrical connectors. All of these components are housed together inside a plastic case. The printed circuit boards enable the module to communicate with the computer. These communications include the module’s voltage levels, specific alarm conditions and overvoltage protection. Additionally, the printed circuit boards will communicate with the computer if the alternating current (AC) power supplied to the computer is suddenly cut off. In such situations, the module will provide back up power to the computer. Thus, the computer will not lose data and can still perform an orderly shutdown.
AC power flows from a wall socket into the computer via an external power adapter. This power adapter converts the AC power from the wall socket to direct current power (DC) at about 18 volts. DC to DC converters within the main body of the computer convert power from the battery module to specific voltages required by individual circuits within the computer. The battery module does not perform any electrical conversion.
ISSUE:
Is the module classified as a static converter of heading 8504, HTSUS, as a part of a static converter of heading 8504, HTSUS, or as an electric storage battery of heading 8507, HTSUS?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof:
8504.40 Static converters:
Power supplies for automatic data processing machines or units thereof of heading 8471; power supplies for goods of subheading 8443.31 or 8443.32; power supplies for monitors of subheading 8528.41 or 8528.51 or projectors of subheading 8528.61:
8504.40.60 Suitable for physical incorporation into automatic data processing machines or units thereof of heading 8471 …
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8504.90 Parts
Of power supplies for automatic data processing machines or units thereof of heading 8471; of power supplies for goods of subheading 8443.31 or 8443.32; of power supplies for monitors of subheading 8528.41 or 8528.51 or projectors of subheading 8528.61:
8504.90.40 Other…
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8507 Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof:
8507.80 Other storage batteries:
8507.80.80 Other …
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The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While not legally binding or dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
EN 85.04 provides, in pertinent part, for:
(II) ELECTRICAL STATIC CONVERTERS
The apparatus of this group are used to convert electrical energy in order to adapt it for further use. They incorporate converting elements (e.g., valves) of different types.
…
This group includes :
(A) Rectifiers by which alternating current (single or polyphase) is converted to direct current, generally accompanied by a voltage change.
(B) Inverters by which direct current is converted to alternating current.
(C) Alternating current converters and cycle converters by which alternating current single or polyphase) is converted to a different frequency or voltage.
(D) Direct current converters by which direct current is converted to a different voltage…
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EN 85.07 provides, in pertinent part, that:
Electric accumulators (storage batteries or secondary batteries) are characterised by the fact that the electrochemical action is reversible so that the accumulator may be recharged. They are used to store electricity and supply it when required. A direct current is passed through the accumulator producing certain chemical changes (charging); when the terminals of the accumulator are subsequently connected to an external circuit these chemical changes reverse and produce a direct current in the external circuit (discharging). This cycle of operations, charging and discharging, can be repeated for the life of the accumulator.
…
Accumulators containing one or more cells and the circuitry to interconnect the cells amongst themselves, often referred to as "battery packs", are covered by this heading, whether or not they include any ancillary components which contribute to the accumulator’s function of storing and supplying energy, or protect it from damage, such as electrical connectors, temperature control devices (e.g., thermistors), circuit protection devices, and protective housings. They are classified in this heading even if they are designed for use with a specific device.
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We note that the majority of your arguments pertain to the term “power supplies” which is located in subheading 8504.40.60, HTSUS. Before we analyze subheading terms, GRI 1 requires that we first examine the terms of the headings and any relevant section or chapter notes. The competing headings are heading 8504, HTSUS, which provides, in pertinent part, for static converters, and heading 8507, HTSUS, which provides for batteries.
The term “static converter” is not defined in the HTSUS. When, as in this case, the tariff terms are not defined in the HTSUS or its legislative history, “the term’s correct meaning is its common meaning.” Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994). The common meaning of a term used in commerce is presumed to be the same as its commercial meaning. Simod Am. Corp. v. United States, 872 F. 2d 1572, 1576 (Fed. Cir. 1989). To ascertain the common meaning of a term, a court may consult “dictionaries, scientific authorities, and other reliable information sources” and “lexicographic and other materials.” C.J. Tower & Sons v. United States, 673 F.2d 1268, 1271 (CCPA 1982); Simod, 872 F.2d at 1576.
In ENI Technology Inc. v. United States, 641 F. Supp. 2d 1337, 1353 -1354 (Ct. Int’l Trade 2009) citing IEEE 100: The Authoritative Dictionary of IEEE Standards Terms (IEEE 100) 912, 1103 (7th ed. 2000), the Court of International Trade (CIT) stated that a static converter is "[a] unit that employs solid state devices such as semiconductor rectifiers or controlled rectifiers (thyristors), gated power transistors, electron tubes, or magnetic amplifiers to change ac power to dc power, dc power to ac power, or fixed frequency ac power to variable frequency ac power.” According to EN 85.04(II), a static converter is “used to convert electrical energy in order to adapt it for further use.” EN 85.04(II) further states that rectifiers, inverters, alternating current converters, cycle converters and direct current converters are all examples of static converters. According to your June 8, 2011 supplement, no electrical conversions occur within the module. Rather, the notebook computer contains DC regulators and DC to DC converters which convert the voltage from the battery to specific voltages required by different circuits within the computer. Since no electrical conversion occurs within the module, the module cannot be classified as a static converter.
Alternatively, you argue that the module may be classified as a part of a static converter of heading 8504, HTSUS. You state that the power supply for the Elite book notebook computer consists of the external power adapter, the instant module, DC to DC converters and other charging components. You assert that if all of these elements were contained together in a single assembly, they would be classified as a power supply of heading 8504, HTSUS. You state that since the module is part of the overarching power supply system of the computer, the module should be classifiable as a part of a power supply of heading 8504, HTSUS.
As stated above, heading 8504, HTSUS, provides for static converters. The heading does not provide for power supplies. Before a power supply can be classified under heading 8504, HTSUS, it must first be classified as a static converter. The instant module is not a static converter. While the module may be part of an overarching power supply system, the module is not a component of a static converter. As such, it cannot be classified as a part of a static converter of heading 8504, HTSUS.
Since the module does not fall under the terms of heading 8504, HTSUS, we must turn to heading 8507, HTSUS, which provides for electric storage batteries. In Headquarters Ruling Letter (HQ) 963870, dated July 14, 2000, CBP set forth several definitions of the term “battery.” In HQ 963870, CBP cites Van Nostrand’s Scientific Encyclopedia (D. Van Nostrand Company, Inc., 1968), which defines a battery as “a collection of chemical cells, normally connected in a series, for the production or storage of electrical energy.” CBP also cites the McGraw-Hill Multimedia Encyclopedia of Science and Technology, (McGraw Hill, Inc. 1994), which describes a storage battery as a “module of identical voltaic cells in which the electrochemical action is reversible so that the battery may be recharged by passing a current through the cells in the opposite direction to that of the discharge. While many nonstorage batteries have a reversible process, only those that are economically rechargeable are classified as storage batteries.” Finally, EN 85.07 states that “[a] number of cells [connected together in series to produce a higher voltage] is called a battery.” The subject module consists of eight lithium-ion cells which are connected together to produce and store electricity.
You argue that the module cannot be classified as a battery of heading 8507, HTSUS, because the module consists of 83 components, such as printed circuit boards. EN 85.07 states that certain batteries, which include ancillary components “which contribute to the accumulators’ function of storing and supplying energy, or protect it from damage, such as electrical connectors, temperature control devices (e.g., thermistors), circuit protection devices, and protective housings,” are covered by the heading. The printed circuit boards assist the module with storing and supplying energy by monitoring voltage and determining when the module requires additional charging. In terms of orderly shutdown, the module performs as a back-up power source when AC power stops flowing to the computer. This is part of the module’s function of storing and supplying energy. All of these functions can be performed by an electric storage battery of heading 8507, HTSUS. Accordingly, the module is classified under heading 8507, HTSUS, as an electric storage battery because these components support the module’s battery functions.
You assert that the module cannot be classified as an electric storage battery of heading 8507, HTSUS, for several reasons. First, you state that the module is classified as a power supply under subheading 8504.40.60, HTSUS, because of the decision in Digital Equipment Corp. v. United States (Digital Equipment), 710 F. Supp 1381 (Ct. Int’l Trade 1988). In Digital Equipment, the CIT classified certain computer power supplies as “parts of automatic data processing machines and units thereof” under item 676.54, TSUS, instead of as “rectifiers and rectifying apparatus” under item 682.60, TSUS. In Digital Equipment, the power supplies had eight or nine different functions: voltage conversion, rectification, controlling electrical noise, protection against original AC power overload, energy storage, orderly shutdown, protection against excessive voltage, insufficient current and excessive temperature. Id. at 1381-1382. The CIT determined that the power supplies could not be classified as rectifiers of 682.60, TSUS, because the range of functions were beyond the scope of the heading.
Similarly, you assert that the range of functions performed by the instant module, in addition to supplying power, remove the module from the scope of heading 8507, HTSUS. As stated above, these ancillary functions performed by the module are noted in EN 85.07 and do not remove the module from the scope of heading 8507, HTSUS. Moreover, in Headquarters Ruling Letter (HQ) H155376, dated June 22, 2011, we classified a battery management system as a battery of heading 8507, HTSUS, even though it had two printed circuit board assemblies which exchanged voltage information with the computer. These printed circuit boards assisted the battery management system with storing and supplying energy by monitoring voltage and tracking charge levels. Therefore, the communications between the computer and the instant module do not take the module beyond the scope of a battery of heading 8507, HTSUS. These communications are less significant than the voltage conversion, rectification and other functions performed by the power supply in Digital Equipment. 710 F. Supp 1381.
In addition to Digital Equipment, you also cite to NY Ruling Letter (NY) N065844, dated June 25, 2009, as a basis for classifying the module under heading 8504, HTSUS. In NY N065844, two power supplies were classified as static converters under heading 8504, HTSUS. However, these two power supplies are distinguishable from the instant module because they contain DC-to-DC converters. As such, the power supplies of NY N065844 were properly classified as static converters. The subject module does not perform any electrical conversion and cannot be classified as a static converter.
HOLDING:
By application of GRI 1, the battery module is classified as a battery of heading 8507, HTSUS. It is specifically provided for under subheading 8507.80.80, HTSUS, as “Electric storage batteries, including separators therefore, whether or not rectangular (including square); parts thereof: other storage batteries: other…” The 2011 column one, general rate of duty is 3.4% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
A copy of this ruling letter should be attached to the entry documents filed
at the time the goods are entered. If the documents have been filed without a copy, this
ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Ieva K. O’Rourke, Chief
Tariff Classification and Marking Branch